Finance Leasing Manual - FLM31.32

First condition: circumstances in which deemed different treatment in consolidated accounts

The effect of Paragraph 28 Schedule 12 FA 1997 (see FLM31.31) is that consolidated group accounts in accordance with UK accounting standards are only deemed into existence where:

• the lessor is a company (Paragraph 28(2)); and

• a company incorporated outside the UK which comes within the definition of a 'parent undertaking' can be identified (Paragraph 28(5)); and

• the lessor is a member of the group of companies whose results would be reflected in the consolidated accounts which a company which is a 'parent undertaking' would have been obliged to draw up if it were UK incorporated (disregarding any exemption because the company is itself a 'subsidiary undertaking').

In practice this situation is most likely to arise where the lessor is the UK resident subsidiary of a foreign parent company (which would not be subject to the UK Companies Act detailed accounting requirements).